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Budget 2013: End of Redundancy Rebate will have negative consequences for employment

Dec 06, 2012

Reacting to the abolition of the Redundancy Rebate, announced as part of Budget 2013, Chambers Ireland has called on the Government to reinstate this rebate or reduce statutory redundancy entitlement to one week for each year of service.

Speaking this morning (06/12/12), Seán Murphy, Chambers Ireland Deputy Chief Executive said, “The current redundancy regime for qualifying employees amounts to two weeks pay for every year of service over the age of 16, plus a bonus week added on. However, when this enhanced statutory redundancy scheme was introduced in 2003 it was only feasible for employers due to the fact that they could avail of a redundancy rebate of 60%. Now that this rebate has been abolished, Government expects employers to abide by their part of the ‘deal’ while the Government has reneged on its responsibility.”

“This is deeply unfair and will have negative consequences for employers seeking to retain existing staff and create new jobs. A financially challenged company that can only survive through layoffs, thereby protecting some jobs, will have no choice but to close, resulting in the loss of more jobs due to the negative impact of these costs on the company’s cash flows.”

“Government needs to accept this reality and support employment by either reinstating this rebate or reducing statutory redundancy to one week per year of service. This would still be more generous than the pre-2003 regime of half a week between 16 and 41 and one week over 41,” he concluded.